What Are Tier 3 Cities In India and Their Classifications

Along with Tier 1 cities, Tier 2 and Tier 3 cities have now developed full potential for rapid growth. With work-from-home opportunities, the majority of the nation’s workforce has retired to their hometowns auguring the need for a better quality of life. The cities are much easier to live in considering the lowered cost input required to sustain a peaceful life. No doubt, Tier 3 cities in India are taking centre stage as India’s growth backbone. 

While mega-cities like Mumbai and Delhi continue to grab headlines, a quieter revolution is brewing in smaller towns – leading towards the rise of Tier 3 cities. These dynamic urban hubs, with populations between 20,000 and 50,000, are emerging as engines of growth, offering a unique blend of affordability, opportunity, and a slower pace of life.

India’s Tier 3 cities are at an exciting crossroads. They offer a compelling blend of affordability, opportunity, and a slower pace of life, attracting young professionals, families, and businesses. As development accelerates, these cities are poised to become the next big thing on India’s urban map, offering a unique and fulfilling lifestyle for those seeking an escape from the metropolises’ frenzy.

What are Tier-3 Cities in India?

To identify the classification of a city, the government has divided the localities into different tiers to help the country prioritise urban planning purposes. These classifications indicate the overall quality of life based on different characteristics. Factors like population size, infrastructure development, economic growth, and amenities influence the classification of the major four tiers. 

In simple terms, Tier 3 cities are the underdeveloped urban cities in India. As per the RBI guidelines, the cities with populations ranging between 20,000 to 49,999 come under Tier 3 cities. Their notable development makes them increasingly attractive investment destinations.

Defining Tier 3 cities isn’t as straightforward as drawing population lines. It’s more about their evolving character. These cities are shedding their sleepy-town image, embracing industrial development, educational institutions, and service sectors. 

Counting the Tier-3 Cities in India

Pinpointing the exact number of Tier-3 cities can be a bit tricky due to varying complicated classifications. Different agencies like the Reserve Bank of India (RBI), and the Ministry of Housing, and Urban Affairs (MoHUA) have highlighted slightly different criteria. However, estimates suggest there are hundreds of Tier 3 cities in India, mapping from the base of the Himalayas to the coastline of Kerala.

Comprehensive List of Tier-3 Cities from Every Direction

Curious about which Tier 3 city could be your next home or investment destination? Here’s a quick peek at some prominent examples, from all the directions of the country:

North India

• Dehradun (Uttarakhand)
• Gwalior (Madhya Pradesh)
• Rohtak (Haryana)
• Amritsar (Punjab)

West India

• Nashik (Maharashtra)
• Rajkot (Gujarat)
• Udaipur (Rajasthan)
• Kolhapur (Maharashtra)

South India

• Mangalore (Karnataka)
• Madurai (Tamil Nadu)
• Coimbatore (Tamil Nadu)
• Mysore (Karnataka)

East India

• Bhubaneswar (Odisha), 
• Guwahati (Assam), 
• Patna (Bihar), 
• Jamshedpur (Jharkhand)

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Real Estate Investment Insights in Tier-3 Cities

With growing opportunities in the IT field and e-commerce resulting in increasing migration, the real estate market is showing signs of revival. The Tier 3 cities pose a great potential for development as compared to Tier 1 and Tier 2 cities. The advantage of comparatively cheaper prices and reasonable construction materials makes these cities a favourable investment option. 

The scheme ‘Housing for All’ launched by the Indian government has provided a noteworthy rise to the real estate sector in Tier 3 cities. Builders are incentivising homeownership through competitive pricing, making houses more accessible to residents. 

The focus of the government on 100 city missions is expected to provide a boost to real estate in the upcoming years. Furthermore, the rising number of NRIs interested in investing in such countries because of the promising rate of return includes another trend resulting in the booming stage. 

Also, the demand for sustainable infrastructure to minimise the environmental impact makes it a promising contribution to the overall real estate sector. The demand for affordable housing is likely to remain strong, particularly in under-developing urban areas. Overall, the focus is shifting from traditional apartments to independent houses, gated communities, and co-living spaces, catering to diverse lifestyles.

Experience Living in Tier-3 Cities in India

Life in a Tier-3 city offers a unique charm. Think cleaner air, a stronger sense of community, and a more relaxed pace of life. You’ll find vibrant cultural traditions mingled with modern amenities. Traffic jams are less frequent, and nature often lies just a stone’s throw away. While career opportunities might not be as diverse as metros, the cost of living allows for a more balanced lifestyle, with ample scope for pursuing hobbies and entrepreneurship. To conclude, tier 3 cities are becoming new centres of economic activity. The warmth of local hospitality and the simplicity of everyday life paint a perfect picture of making Tier 3 cities a compelling choice for those seeking a balance between urban and peaceful atmosphere.

FAQ’s about Tier 3 cities in India